China

China's workforce

Will you still need me?

ON FRIDAY, the National Bureau of Statistics announced that China's working-age population shrank last year. In the slow-moving world of demographics, that felt like a dramatic turning point: "peak toil", if you like. The mobilisation of Chinese labour over the past 35 years has shaken the world. Never before has the global economy benefited from such a large addition of human energy.

And now the additions are over. The ending came rather sooner than expected. The percentage of Chinese who are of working age started falling in 2011. But the number of working-age Chinese was expected to grow for a few more years yet. As recently as 2005, official projections suggested it would grow until the mid-2020s.

I'm not sure why demographers got it wrong. Predicting future rates of longevity and especially fertility is undeniably hard. But surely it isn't that difficult to figure out how many people aged seven today will become 15 (and thus of working age) in eight years' time. Therefore, it shouldn't be that hard to predict the near future of the working-age population. Perhaps the difficulty lies not with prediction so much as measurement. As I understand it, the yearly estimates of China's population are based on an annual national survey of about 1.5m people. Given the size of China's population, it would be easy to miscalculate the numbers by a few million here or there. Such errors could easily throw a projection out by a few years.

Also worth bearing in mind is the definition of working age. In last year's press release, working age was defined as 15-64 years old. That is a common age range used by the UN's Population Division and China's own Statistical Yearbook. But for the purposes of Friday's press conference, the NBS changed the definition, referring instead to 15-59 year olds. The number of Chinese in this age group declined by 3.45m, it reported (see chart). But the number of people aged 15-64 seems to be increasing still. It rose to 1.004 billion in 2012 (I inferred this total based on other numbers provided in the press conference).

There's nothing wrong with either age range. The 15-64 range reflects common international practice and China's own past definition. The 15-59 range is probably a better reflection of China's economic reality, where men can retire from formal jobs at 60 and women often retire five or ten years earlier. (According to the National Transfer Accounts pioneered by Ronald Lee and Andrew Mason, 60 is the age at which the average Chinese earns less than he consumes, becoming, in effect, a dependant.)

But it's interesting that the NBS chose to rejig the definition of working age for this press conference. One can only assume they chose the 15-59 age group precisely because its numbers are already declining. That allowed them to highlight a worrying demographic trend. In response to a reporter's question, Ma Jiantang, the head of the NBS, said he did not want the population figures to be lost in the sea of data.

It is almost as if China's statisticians decided to set the clock a few minutes fast to make sure China's policymakers have good time to prepare for their impending demographic duties.

Sory to those doom sayers, it’s actually a very good thing to China to see it’ winding down the so called “demographic dividend”.
.
We see a reduction of 3.45 million persons from age 15 to 59, out of 937 million of labor population in 2012. It’s welcoming news because China is still poor, with a per capita GDP of about $6,300 (on 2012 GDP of 51.9322 trillion Yuan or $8.31 trillion @ 6.25/$ exchange rate), a very low GDP by world standard indeed.
.
As such China has a long way to go in its hard and soft infrastructure building, housing and standard of living improvement. So I believe China is trying to restructure its industrial orientation from low end to higher end products and business, and to focus more to uplift peoples’ standard of living and education.
.
Already, and within the past five years, China has built, from practically nil to world’s largest healthcare safety net that now covers more than 95% of China’s population. China is spending a full 4% of its GDP on education, and at 861 billion Yuan (about US$130 billion) in R&D in 2011, China is world’s second biggest R&D investor after USA.
.
For the past 5 years, between 6 to 10 million of housing units are built or being built each year for lower income families, and the nagging and notorious income disparity and inequity as measured by gene index has been dropping in each of past four years. Food on the table has also been improved tremendously.
.
Admittedly, all of the above “achievements” are not enough for a population this large. China sure has its huge work cut out for it in the out years. The blessing here is that these “demographic dividend” is not disappearing right away, it's good for several more decades, and that's time enough for a higher end and more prosperous economy to catch up with.
.
The year 2013 will be another watershed too, at about the same time of China's National Bureau of Statistics announcement, a German newspaper published a forecast that for the first time since Western GDP exceeded 50% of world total in 1815, with that of USA alone accounting close to 50% of world GDP in the 70s last century, the Western GDP will dip below 50% of world’s total GDP in 2013, for the first time since 1815.
.
That’s not bad news for the West either IMO; it means that the rest of the world is living better as their economies are being catapulted by the pioneering economic development of the Western world of the past 200 years.

It is not the number of working people that matters but the quality of the work force that does. Only Indian nationalists, like the Rajs of the old, will talk endlessly about their country's "population dividend" as if half a billion uneducated people stuck in poverty is going build the next superpower.

A slowly declining labor pool at this point is good news. China is already suffering serous environmental consequences of break neck industrialization sustained by the need to maintain social stability through job creation. The decreasing number of youth entering the labor force will give the policy makers the needed slack to transition the economy away from the present mix of manufacturing/infrastructural/housing into a more sustainable mix. As long as the productivity increases, the economy can keep on growing.

On the flip side of this is the long term 4-2-1 problem regarding retirement and pension. I feel the policy response to this is to abolish the 1 child policy or at least change it to a regional quota. Provinces like Tibet should have no limit on the number of children regardless of ethnicity while coastal provinces could have a ceiling of 2 kids per family.

Effective labor is the raw "amount" of labor multiplied by a labor efficiency variable: labor productivity, which is influenced by education, experience, and skillfulness etc. So while the sheer size of China's work force by no longer be on the rise, productivity still is, and thus effective labor may still be increasing for some time.

"Never before has the global economy benefited from such a large addition of human energy."

Stopped reading right there. The author shows an extreme lack of understanding on any real "benefit" to the world economy that the hollowing out of the US and EU's industrial labor force at the expense of near slave wage labor from China.

I should have known better than to expect anything of real substance about China from The Economist, or most western based rags in the first place.

Michael Pettis is a much more reliable source of info on what's actually going on in China.

Well, this article is a bit overreacting. China's working population has been abnormally high and now it is time to shrink. Why is it such a big deal for a country with already more than 1.3 billion people? Look on the bright side. I can say that population decline is a postive thing since each worker can become more efficient than before.

I also agree that this (NBS data) shrinking of 3.45 m out of about 1 billion labor force in china is good news.
.
as chinese government is re-prioritising its industry with more emphasis on education, greenhouse gas emission reduction and productivity, chinese workers will be more educated, efficient, productive, healthier and richer. each worker decades later can support far more retirees and disabled than s/he can today.
.
chinese population will grow older, as every nation does with a growing economy, but they will also be helthier, richer and more prosperous.
.
this 'getting old before getting rich' nonsense is maliciouly intended, no chinese in his/her right mind should buy that.

but however you twist and cut it, it does not change the fact reminding the world that japan is still a vassal slave state with foreign troops and bases stationed all over japan. japanese are still treated as second class citizens at best in their own country by the occupying troops.
.
china may or may not have labour shortage problems in the future, but in order for japan to be independent and free, it must let ryukyus islands to be indepedent and free first.
.
only letting ryukyus will asian nations china, india and korea will land a hand to rescue japan with money loans and more trades.

China's high proportional growth rates are due to coming from a very low GDP/ capita base. In absolute terms (additional GDP/ capita in dollar terms), China has grown less quickly in the past decade than many other countries.
.
E.g. while in PPP 2005 dollars, China added $4,550 to per capita GDP between 2001 and 2011, absolute growth was higher in Poland, Slovakia, Czech Republic, Turkey, Estonia, Lithuania, Latvia, Sweden, Russia and South Korea.
.
https://www.google.co.uk/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:CHN&dl=en&hl=en&q=gdp%20china#!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_pp_kd&scale_y=lin&ind_y=false&rdim=region&idim=country:CHN:KOR:POL:SVK:SWE&ifdim=region&hl=en_US&dl=en&ind=false

---------------------

While it is true that China retains plenty of space for productivity catch up & rising incomes, and this will allow China's elderly to enjoy higher living standards than today, it's important to realise that China's current proportional growth rate will fall in the coming decades (absolute growth in per person incomes will not rise much above East European levels for the foreseeable future).
.
Already, scarcity of cheap labour, scarcity of land, scarcity of fresh water and scarce capacity of the environment to endure industrial activity is constraining potential for further volume0based investment and growth - China's economy has to pivot & reform, rather than simply scaling up. As that happens, investment returns will diminish and rates of capital accumulation will fall.
.
China will have a much richer future to look forward to, and will make a great contribution to the world. But it's important to keep everything in perspective.

This is the whole point of the 1-child policy isn't it? Allowing each family to pool all their resources into 1 child's education?
I think Chinese workers' productivity have far more impact on the world's economy than the total number in the labor force, a few hundred million competing knowledge workers is not going to be nearly as beneficial to western economies as a hundred million low cost labor.

By the year 2020 twenty million Chinese men will find shortage of women for marriage. They are already trying to import girls from such countries as Myammar illegaly, it will not help much. The situation will further worsen the number of workers availabe after say 40 years, while rich young boys and girls are immigrating to abroad at a rate of 70 thousand per month!!

The addition to the globally available Chinese labour force is not by any means over, as people migrate from the land,(where their income is very low) to second and third tier cities,Chinese incomes will continue to rise driven by urbanisation as well as productivity growth.
As productivity growth remains high (17% in the private sector a couple of years ago) incomes will continue to rise. Infrastucture is likely to continue to be better than in a lot of South and South East Asia.
The jobs which will go to Bangladesh and Vietnam will be the very low paid ones which require only a sewing machine (or similar) as capital investment. Industries like Autos and electronics which have complex supply chains and a need for scale will continue to grow in China. China will still have a labour force of nearly a billion. The only real labour shortage will be for very low paying jobs which will either move into the Chinese countryside or to the Indian subcontinent (or SE Asia).
This does not mean the Chinese economy will collapse or become uncompetitive, only that development will continue and really low wage jobs will migrate. China will really only have a serious problem if productivity growth stagnates (unlikely until the economy becomes a lot more urbanised)or investment ceases to make a decent return (which may happen without further reforms).

japns did not fall in love with, they are just being made abjectly submissive to the conqueror.
.
like breaking or domesticing an animal, you'd have to whip them and give them goody bags to train them into submission.
.
that's why people should treat their defeated but unrepentant war time war crime awashed enemy by taking no prisoner but instead treat them as second class people, then and only then they will 'fall in love' with you, but watch out your back in the middle of sleep always, pearl harbour may be just around the corner.

For this situation, some people think this is a good news. However, I had to say this is a exam for China, examing the pension system and health system. Please also focus that there are two people affording four elder people's living. If somebody realized Japan deeply, he/she will notice that the elder become a major social problem, This is also one reason of slow increase of Japan Economic.

With men effectively retiring at 60 and women at 50, it seems to me that China still has plenty of levers to increase its workforce. At the other extreme, I don't see 15 year old as a realistic assumption age for labor force entry in an educated industrialized society.
Speaking of industrialization, the game changer is not so much the size of China's labor force as that of the quickly dwindling pre-industrial labor force. When it will have been fully tapped, that is going to be interesting times for the Chinese and world economies.